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IMF Economic Review

, Volume 64, Issue 2, pp 268–302 | Cite as

The Implications of Natural Resource Exports for Nonresource Trade

  • Torfinn Harding
  • Anthony J Venables
Article

Abstract

Foreign exchange windfalls such as those from natural resource revenues change nonresource exports, imports, and the capital account. The paper studies the balance between these responses and shows that the response to $1 of resource revenue is, for our preferred estimates, to decrease nonresource exports by 74 cents and increase imports by 23 cents, implying a negligible effect on foreign savings. The negative per $1 impact on exports is larger for manufactures than for other sectors, and particularly large for internationally mobile manufacturing sectors. Although standard Dutch disease analysis points to contraction of the tradable sector as a whole, division into nonresource exports and imports is important if, as suggested by much development literature, a higher share of exports to GDP is associated with faster growth. The large negative impact of resources on these exports points to the difficulty resource-rich economies face in diversifying their exports.

JEL Classifications

E21 E62 F43 H63 O11 Q33 

Supplementary material

41308_2016_BFimfer201543_MOESM1_ESM.dta (218 kb)
Supplementary material, approximately 223 KB.
41308_2016_BFimfer201543_MOESM2_ESM.txt (11 kb)
Supplementary material, approximately 12 KB.

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Copyright information

© International Monetary Fund 2016

Authors and Affiliations

  • Torfinn Harding
  • Anthony J Venables

There are no affiliations available

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